• Wednesday, February 28, 2024
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BusinessDay

Naira falls amid marginal rise in FX turnover

Naira currently undervalued – Cardoso
The high demand for dollars continued on Friday as naira depreciated slightly despite marginal increases in the daily foreign exchange (FX) turnover.
The daily FX market turnover, which reflects the level of activity at the Investors and Exporters (I&E) rose by 7.88 percent to $71.68 million on Friday from $66.03 million recorded on Thursday, data from the FMDQ indicated.
After the day’s trading, dollar was quoted at N463.00, gaining 0.22 percent compared to N462.00 quoted on Thursday at the I&E forex window, Nigeria’s official foreign exchange market.
Most currency dealers who participated at foreign exchange market auction on Friday maintained bids between N460.00 (low) and N466.00 (high) per dollar.
At the parallel market, also known as black market, naira appreciated against the dollar, gaining 0.40 as the dollar traded at N735 as against N738 per dollar on Wednesday.
“It was a positive outing for the naira at the parallel foreign exchange market in the just concluded week, as it appreciated by N1 or 0.27 percent week on week to close at N739/USD from N738/USD in the previous week,” analysts at Cowry Asset Management Limited said.
Also, on a week-on-week at the investors’ and exporters’ FX window, the Naira edged out the United States’ dollar by N0.67 or 0.14 percent week on week to close at N463/USD from N463.67/USD the previous week as traders in the market maintained bids between N463 and N467 on the back of a weakening dollar against peer currencies.
At the Interbank foreign exchange forward contracts market, the spot exchange rate remained unchanged, closing at N462/USD.
“Also, in our analysis of the naira/USD exchange rate at the weekly Naira FX Forward Contracts Markets, it was the dollar reign across all forward contracts with depreciations reported for the naira across various contract tenor gauges. As a result, the naira lost strength by 0.23 percent, 1.16 percent, 1.30 percent, 1.92 percent and 0.79 percent week on week to close at contract offer prices of N469.74/USD, N484.66/USD, N496.22/USD, 526.22/USD and N565.24/USD, the analysts said.
In the oil market this week oil price movement rebounded during the week to trade at $76.85 per barrel in the midst of increasing fear of recession and high booking of the Chinese ahead of May holiday. However, on the home front, data from the CBN data bank showed that the Bonny Light crude price plunged by 3.90 percent or (USD3.44) week on week, to close at USD84.71 per barrel (April 26) from USD88.15 per barrel in the previous week amidst the persistent worries on oil demand and the market volatility due to price fluctuations.
“Next week, we expect the naira to trade in a relatively calm band across various market segments barring any market distortion and as the apex bank continues its weekly FX market intervention to defend the value of the naira,” the analysts said.